Form 8949: How to Report Capital Asset Sales

Form 8949 is where you list each sale or exchange of a capital asset, such as stock, crypto, collectibles or investment property, before the totals flow to Schedule D. Each row shows what you sold, when you bought and sold it, the proceeds, your cost basis, any adjustment and the resulting gain or loss. The hardest part is not the arithmetic but picking the right checkbox and adjustment code, especially now that digital assets have their own boxes.

Self-employed people meet this form more often than they expect: selling crypto received from clients, cashing out stock grants from a former job, or selling an investment property. This guide walks through the 2025 version of the form, which is used for returns filed in 2026, with worked examples and the mistakes that trigger IRS notices. It is general information, not tax advice, so confirm details for your own return with a tax professional.

What Form 8949 is for

Form 8949, Sales and Other Dispositions of Capital Assets, reconciles the amounts brokers report on Forms 1099-B and 1099-DA with what you report on your return. According to the IRS Form 8949 instructions, individuals use it for capital asset sales reported on Forms 1099-B, 1099-DA or 1099-K, sales not reported on any form, nonbusiness bad debts, worthless securities and qualified opportunity fund items. Form 8949 is completed before Schedule D, and Schedule D then applies the capital gain tax rates.

Business property used in a trade, such as equipment or a work vehicle, is not reported here. Its sale goes on Form 4797, and its depreciation history comes from Form 4562.

Short-term vs long-term: Part I and Part II

Part I is for assets held one year or less, and Part II for assets held more than one year. Count the holding period from the day after you acquired the asset through the day you sold it. Inherited property is generally long-term regardless of how long you held it, and nonbusiness bad debts are always short-term.

The split matters because long-term gains get lower rates. For 2026, the 0% long-term rate applies up to $49,450 of taxable income for single filers and $98,900 for married couples filing jointly, and the 15% rate up to $545,500 single and $613,700 joint, with 20% above those amounts (Rev. Proc. 2025-32). Short-term gains are taxed at your ordinary rates; see the 2026 federal tax brackets.

Which box to check on Form 8949 (A through L)

Every Part I or Part II page must have exactly one box checked, and you use a separate page for each box that applies.

Situation	Short-term (Part I)	Long-term (Part II)
Form 1099-B, basis reported to IRS	A	D
Form 1099-B, basis not reported	B	E
No 1099-B (non-digital asset)	C	F
Form 1099-DA, basis reported to IRS	G	J
Form 1099-DA, basis not reported	H	K
Digital asset, no 1099-DA received	I	L

Do not use boxes C or F for digital assets. Most crypto sold in 2025 falls in H, K, I or L because brokers were not yet required to report basis. For how brokers fill the digital asset form, see our Form 1099-DA guide.

How to fill out Form 8949 column by column

Column	What to enter	Tip
(a) Description	e.g. 100 sh XYZ Co; for crypto, units and token name	Add a transaction ID for digital assets if you have one
(b) Date acquired	Month, day, year	"VARIOUS" for multiple lots, "INHERITED" for inherited property
(c) Date sold	Month, day, year	Trade date, not settlement date
(d) Proceeds	Sales price from the 1099 or your records	Net of selling costs only if no 1099 was received
(e) Cost or other basis	Purchase price plus fees, or value when received	Crypto received as pay: dollar value on receipt date
(f) Code	Adjustment code(s), if any	Leave blank if no adjustment
(g) Adjustment	Amount of adjustment	Negative amounts in parentheses
(h) Gain or loss	(d) minus (e), then apply (g)	Totals carry to Schedule D

The adjustment codes you will actually use

• B: basis shown on the 1099 is wrong (common with stock compensation and crypto transfers).
• W: wash sale loss disallowed, entered as a positive adjustment.
• E: selling expenses or option premiums not reflected on the form.
• L: nondeductible loss, such as a personal-use item reported on a 1099-K that sold at a loss.
• H: excluded gain on the sale of your main home.
• M: multiple transactions summarized on one row with an attached statement.
• N: you received the form as a nominee for someone else.

When you can skip Form 8949

Under Exception 1, you can put totals straight onto Schedule D line 1a or 8a when the broker reported basis to the IRS, no adjustments are needed and the transactions are not collectibles or other special items. Under Exception 2, you can attach a statement listing the same details (for example, a broker's tax report) and enter combined totals on Form 8949 with code M. Most tax software does this automatically when you import a consolidated 1099.

Step by step: reporting your sales

1. Gather every Form 1099-B, 1099-DA and 1099-K, and your own records for sales with no form.
2. Group transactions by box (A to L) and by short-term or long-term.
3. Check each basis figure. Correct missing or wrong basis using purchase confirmations, invoices for crypto received as payment, or inheritance valuations.
4. Enter rows or summary totals, with codes and adjustments where needed.
5. Total each page and carry the totals to the matching Schedule D line.
6. Apply the $3,000 annual net capital loss limit ($1,500 if married filing separately) and carry any excess forward.

Worked example: stock and crypto on one return

These figures are illustrative. A consultant had three sales in 2025:

Asset	Box	Proceeds	Basis	Code / adj.	Gain (loss)
50 sh ABC, held 3 years, 1099-B basis reported	D	$9,000	$5,000	none	$4,000
0.1 BTC received as client payment in Jan 2025, sold Nov 2025	H	$9,500	$10,200	none	($700)
1,000 USDC, swapped on a DeFi app, no 1099-DA	I	$1,000	$1,000	none	$0

The ABC sale could go directly on Schedule D line 8a under Exception 1. The bitcoin's $10,200 basis is the dollar value on the day the client paid, which was already reported as income on Schedule C. Her net result is a $4,000 long-term gain and a $700 short-term loss, which Schedule D nets together.

Common Form 8949 mistakes

• Reporting zero basis. Leaving basis blank when the 1099 shows none can make you pay tax on the entire sale price.
• Taxing crypto income twice. Crypto received for work has a basis equal to the income you reported.
• Using the wrong box for crypto. Boxes C and F are not for digital assets from 2025 onward.
• Forgetting small or off-platform sales. A DeFi swap or a sale on a foreign exchange still belongs on the form.
• Deducting personal-use losses. Losses on personal items, such as a used car, are not deductible; use code L to zero out a 1099-K loss.
• Missing the holding-period day count. Selling one day too early turns a long-term gain into a short-term one.

Edge cases worth knowing

Gifted and inherited assets

Inherited assets usually take a basis equal to fair market value at the date of death and are long-term. Gifted assets generally carry over the donor's basis, with special rules if the value was lower than basis at the time of the gift.

Selling business property

Equipment, vehicles and rental property used in business go on Form 4797, not Form 8949, and any depreciation claimed may be recaptured. If you sold part of your home that you used as an office, the depreciation from Form 8829 affects the result.

Amending after a missed form

If a 1099 arrives after you file, add the sale on an amended return using Form 1040-X. Gains may also mean you should raise your quarterly estimated taxes to avoid an underpayment penalty.

How capital gains affect the rest of your return

Form 8949 totals do more than set your capital gains tax. A large gain raises your adjusted gross income, which can phase out credits and deductions and push more of your ordinary income into higher brackets. Gains are not subject to self-employment tax, but they can trigger the 3.8% net investment income tax once modified adjusted gross income passes $200,000 for single filers or $250,000 for married couples filing jointly; those thresholds are not indexed for inflation.

Gains also change how much tax you should be paying during the year. Freelancers already make quarterly payments for business income; a big crypto or stock sale in, say, August should be reflected in the September or January estimated payment, otherwise the safe harbor rules may not protect you. Losses work the other way: net capital losses offset up to $3,000 of ordinary income a year, and the rest carries forward indefinitely until used.

Result on Schedule D	What happens
Net long-term gain	Taxed at 0%, 15% or 20%, plus possible 3.8% NIIT
Net short-term gain	Taxed at ordinary income rates
Net loss up to $3,000	Deducted against other income
Net loss above $3,000	Carried forward to future years, keeping its character

If you received crypto from clients and its value fell before you sold, the capital loss can offset gains on other investments. It does not reduce the self-employment tax already due on the income, which is one reason many businesses convert crypto payments to dollars quickly.

Records to keep for every sale

Basis disputes are won with paperwork. Keep trade confirmations, crypto exchange exports, wallet transaction hashes and, for crypto received as payment, the invoice showing the dollar amount and date. The IRS can generally audit three years back, and longer in some cases, so read how long to keep invoices before deleting anything. If you accept digital payments, our post on accepting crypto payments covers how to set this up cleanly.

For income received in crypto or any other form, a dated invoice is the simplest proof of value and basis. Create one in minutes with our free invoice generator, with no sign-up, and download it as a PDF to keep alongside your Form 8949 records.